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In view of FX Strategists at UOB Group, the upside momentum in Cable could extend to the 1.3400 area in the near term.

Key Quotes

24-hour view: “Expectation for GBP to consolidate was wrong as it surged and broke through the major 1.3280 resistance. GBP extended its gain early this morning as it hit a fresh high of 1.3328. The rally appears to be running ahead of itself and while another push higher to 1.3350 would not be surprising, a sustained move above this level seems unlikely for today (next resistance is at 1.3380). On the downside, we expect 1.3240 to be strong enough to hold any intraday pull-back (minor support is at 1.3270)”.

Next 1-3 weeks: “In last Thursday’s update (05 Jul, spot at 1.3230), we noted the “improved undertone” and held the view that GBP “is ready to test the top of the range at 1.3280″. GBP subsequently took out this level on Friday and extended its gain early this morning as it hit a high of 1.3328 during Sydney hours. The undertone has improved further and while we are not ready to adopt a bullish stance just yet, we expect GBP to stay supported and see chance for further GBP strength to 1.3400. A clear break of this level would open up the way for a test of the major 1.3470/75 level (the peak in June). On the downside, only a move back below the ‘key support’ at 1.3200 would indicate that the current upward pressure has eased”.